New provision for relief from penalty under income tax act


New provision for relief from penalty under income tax act



Think before filling appeals under I-Tax act 1961 for the A.Y. 2017-18 read with new section 270AA


If additions have been made by A.O. than most popular remedy is to file an appeal against these additions u/s 246A


Further penalty proceedings also get started with these additions practically in most of the cases. Many a times assessee is willing to pay taxes against main additions but fights case due to imposition of penalty which is immediately imposed on accepting the additions.


Now new section 270AA has taken care of this aspect and provides immunity from imposition of penalty under section 270A along with prosecution u/s 276C/276CC, if assessee within 30 days from the end of month in which order is received make an application with A.O. in Form 68 for this purpose.


Here, it is pertinent to note that this immunity is available only for under reported transactions as defined u/s 270A (1) to (7) where amount of penalty is 50% of tax payable


Assessee can’t file appeal against these additions and has to pay tax as per demand Notice. Hence, if demand notice is on higher side due to technical reasons by not giving credit of TDS etc than before filling this application, it should be get reduced by rectifying u/s 154.


If application is rejected, the limitation period of filling appeal also get extended as per second proviso of sec 249 (2) (b) for the difference in time of filling application & receiving order of rejection.


Further this immunity is also not applicable to misreporting of income as defined u/s 270 A (9) of income generated as follows by:-

(a) Misrepresentation or suppression of facts;

(b) Failure to record investments in the books of account;

(c) Claim of expenditure not substantiated by any evidence;

(d) Recording of any false entry in the books of account; 40

(e) Failure to record any receipt in books of account having a bearing on total income; or

(f) Failure to report any international transaction or any transaction deemed to be an international transaction or any specified domestic transaction to which the provisions of Chapter X apply.


Please note, penalty in case of mis-reported transaction is 200% of tax payable.


Further, in case additions consist of partially of under reported transactions & partially of mis-reported transactions than no benefit can be availed u/s 270AA.


No benefit of earlier years now being assessed u/s 148/153A or C under this section can be obtained as same were covered u/s 271 (1)(C) for penalty purpose.

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